Planning to move or refinance over the next few years—or do you expect your income to increase? Then an adjustable-rate mortgage (ARM), with lower initial interest rates, may make sense for you.
Best if you
- Want an initially lower monthly payment
- Plan to refinance or move in the next few years
- Expect a future increase in income
- Enjoy lower payments at the beginning of your loan term
- Explore the potential for a larger loan amount
- Choose from adjustable-rate mortgage options of 3, 5, 7 or 10 years
Estimate your ratesAll fields are required.
Ready to get started?
What steps should I take to buy a home?
Buying a home is exciting, but it can also be overwhelming. You can feel more confident about this important milestone if you see the home-buying process as a series of steps.
1. Get prequalified
Before you start looking, contact a mortgage professional to discuss prequalification. A professional can determine how much you can afford to pay on a mortgage before you begin your search. Three areas typically evaluated include:
- Your income—how much you regularly earn through your job and other sources
- Your debt and credit—how much you pay in bills and how well you generally pay them
- Your assets—how much you have saved and invested, as well as property you own
2. Find a home
When you have your prequalification letter, work with a real estate agent to find a home that's right for you. Determine the type of home that meets your lifestyle. Have your wish list ready so you know whether a home fits your needs.
3. Make an offer
Once you find the home you want, work with your real estate agent to develop an offer. Your agent will find comparable homes in the area to help you calculate the right offer price. (Make sure your offer leaves you enough money to make any necessary improvements to the home.)
Your agent will then complete and negotiate the sales contract with the seller. Once the home passes inspection and fixes are agreed upon, you'll have accomplished a major step in buying a home: a signed offer.
4. Apply for a mortgage
Now that you have a signed offer, it's time to convert your prequalification into an application and verify your loan selection with terms. You'll meet with your mortgage professional to discuss interest rates and closing costs, and review the documentation needed to confirm your income and assets.
5. Wait for the mortgage approval process to complete
A few wheels are set in motion upon submitting your mortgage application:
- Your mortgage professional will order an appraisal to verify the home's value.
- Your mortgage professional will order a title search.
- Your documentation will be verified.
- Your monthly payment will be calculated, which includes any homeowners insurance, tax payments and HOA payments.
During this time, the mortgage lender reviews all the documentation you provided to support your income, assets and other details in a process called underwriting. Meanwhile, the home is appraised. If the appraisal comes in at a value that supports the sale price, and the lender is satisfied with the loan after underwriting, you can be approved for the mortgage loan.
6. Attend the closing, and the house is yours
On closing day, you'll meet with the title company or attorney managing the closing. There will be a number of documents to sign, but once they're completed, guess what? You'll receive the keys to your new home.
Remember that while home buying is a process, you don't have to go through it alone. Find a good agent and mortgage professional to guide you every step of the way.
Where to find down payment assistance
Making a down payment for your new home can be difficult, but there are many down payment assistance options that may be able to help you.
On average, how much assistance is available?
Depending on the situation, average down payment assistance ranges between $5,000 and $20,000. However, there are many forms of assistance available, each of them with their own strict conditions. There is no guarantee that either you or the property that you intend to buy will qualify for down payment assistance.
How do I know if I qualify?
You might qualify for down payment assistance based on a number of factors. Some of these factors could be self-evident, and others could require some research on your part.
For example, veterans and active military can apply for a Veterans Administration loan. Since the federal government guarantees these loans, they do not require a down payment.
If you live in certain areas, Rural Development loans can be guaranteed by the USDA. These loans would not require a down payment, but instead, have a smaller one-time fee that can be incorporated into the mortgage. However, your income has to fall within a certain range of the median salaries in the area, the property needs to have an eligible location, and many more conditions apply. First, you'll want to consult the USDA Rural Development eligibility map (opens in a new tab) about the property, and then find out if you qualify.
In all cases, ask your mortgage lender about your down payment assistance options. Then do some extra research to find out about programs that might be able to help you.
Are there conditions on the property being purchased?
The price, type, location and use of the home can affect the availability of down payment assistance when you're ready to make a purchase. Once you've chosen the property you want to buy, ask your mortgage lender to explore the options available to you.
What are the main categories of down payment assistance?
Federal and state governments, as well as local organizations and municipalities, have programs to assist qualified applicants.
The most popular down payment assistance programs come from the federal government. You may qualify for one of these programs if you're a first-time home buyer, veteran, active military, teacher, or if you live in a rural area. There may also be requirements on your income, property type, acreage and more.
To learn more about federal down payment assistance programs, visit these sites:
Each state has an agency that offers its own down payment assistance programs. To find the programs available in your state, use the helpful directory at hud.gov (opens in a new tab).
You may be able to find a down payment assistance program right in your backyard. Counties, cities and local organizations (like Habitat for Humanity) offer a variety of grants and other methods to help with your down payment.
To find options specific to your area, consider using the search terms "low down payment mortgage" along with your city, state and county.
Ready to get started?
Not convinced that an adjustable-rate mortgage is right for you?